When December comes along, most businesses go crazy on all fronts. During the holiday season, small businesses struggle to find time to do their bookkeeping. Ignoring and putting bookkeeping aside is a big mistake, as there will be a lot of things to be done before the year ends for your books. Stay focused on hitting the sales goals, assessing the budget and more. Let’s see these important fronts that you might be missing, so that you can focus more on family this holiday?
Bookkeeping Cleanup
It is a wonderful time to comb over your bookkeeping and check if everything is in order. Starting with your bookkeeping software is a good place to start. Review your transactions and add memos when you can so that when the CPA starts checking it would be easier for both parties.
You also need to look at your assets and liabilities. Make sure that every transaction is properly coded to your asset accounts. Some example mistakes are to mark office supplies to the equipment assets account. Make sure that you often check accounts are placed on the proper account.
Also make sure that the payroll liabilities, loans and lines of credits have accurate balances.
Create a Budget
Setting a budget after the year end is a mistake. Always set budgets prior to the year end, you will have a good idea how your year is going to be once December comes along in your finances. Any kind of major change in your business in December requires your budget to be re-worked, it rarely happens but it’s good to note it always.
Remember, January should be a time to execute your budget plan, not create one.
Review your Books Especially with a CPA
Make sure that you have your CPA review your bookkeeping before the year ends. It is important to have a tax review and tax estimate prior to year end. This helps you understand your tax liability more clearly. You will also have a good view of your tax liabilities and curtail any problems arising from it especially if you’re owing a lot of money. An early warning if you owe money rather than a shorter time to resolve them will help you create a habit that will avoid the same problems in the future.
It is also a good time to ask your CPA to help with transactions that you are not sure how to properly code in. They can also review the books for errors and can classify large purchases and expenses. You need to treat it as an asset as you may have understated your actual profit and taxable income by a large gap.
Assess your Bookkeeping System
Lastly, you need to reassess and assess your general bookkeeping needs. A thorough financial analysis, year end reports and pertinent financial information will help you see the bigger picture and the real state of your business by the end of the year. You will see important pain points and opportunities to grow your business. You can review your shortcomings and errors in your bookkeeping and remedy them to avoid them in the future.
Need some bookkeeping help from KDF Bookkeeping this December to make sure next year is your best year ever? Contact Us Now!